Protest highlights unnatural aspects of economic system

By making nature's value visible, decision-makers can take into account the true benefits and costs of conservation and restoration (Credit : alexindigo via Flickr).

By David Suzuki with contributions from Michelle Molnar, David Suzuki Foundation environmental economist and policy analyst

In early November, 70 Harvard University students walked out of their introductory economics class. They wrote to Prof. Gregory Mankiw that the biased nature of his course "perpetuates problematic and inefficient systems of economic inequality in our society." Mankiw is the author of Principles of Economics, a textbook used by almost every economics student in the Western world.

The walk-out was part of a larger event organized by Boston's Occupy protest, and it echoed a key element of the worldwide Occupy movement. Like these students and protesters, I've been thinking about our dysfunctional economic paradigm. I share the anxiety that we are sacrificing too much to a system driven by three fallacies: that well-being can only be measured in money, that distribution does not matter, and that the economy can grow forever. And like so many people today, I question whether our economic system is serving the goals that are important to society. After all, an economy is a means to prosperity, not the end.

This economic system is relatively new. In the 1930s and '40s, world leaders had to address unemployment and underproduction. Many of our current economic measures were developed when natural capital (the benefits that nature provides) was plentiful but built capital (buildings, machinery, infrastructure) was not. In providing more manufactured goods and services, we developed a blind spot to the economic importance of natural systems. Labour, built, and financial capital are typically considered as the primary factors of production for economic development. Land and natural systems have seldom been included.

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With growing human populations and profit-driven, consumer-based economics, more land is being eaten up by development, habitat is being destroyed and degraded, and resources are being exploited at unsustainable levels. Natural capital is disappearing.

For example, salmon were abundant on B.C.'s West Coast in 1900. More built capital, such as nets and boats, was required to harvest them for food. By 2000, there were no shortages of nets and boats, but the fish and the habitat they need to survive had become scarce. As natural capital and the goods and services it provides have diminished, interest in this area of economics has increased.

But we still have far to go. The services provided by nature and the qualities that contribute to human well-being are still invisible in the marketplace. Because we have elevated economics above everything else, this is dangerous. When you have a society that largely equates the quality of life with economic indicators, such as gross domestic product, and those indicators fail to track the health of its fundamental inputs, you end up on shaky ground.

How do we address this? One tool is natural capital valuation. Putting a price on nature's services is a complicated subject. Although nature's full worth is unquantifiable, its ecosystems undeniably provide services to society that have real and tangible economic weight. For example, wetlands filter water and reduce natural disasters such as flooding, and forests manage water runoff and provide habitat for pollinators.

By making nature's value visible, decision-makers can take into account the true benefits and costs of conservation and restoration. These economic benefits have even received the attention of the World Bank, which plans to assist countries in tracking natural capital assets and including them in development plans, in the same way we track other wealth using the GDP index. And more recently, former Canadian Prime Minister Paul Martin has advocated including natural capital in national accounts.

These measures won't completely change our current economic paradigms, but they could at least slow the rampant environmental devastation and its consequent impacts on human health and well-being that are a symptom of our profit-driven corporate economies. They may also help us to think about what we truly need to be healthy and happy as humans, and to see the trade-offs inherent in our activities. Until we do this, we cannot hope to address the inequalities the students and the Occupy protesters are rallying against.

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3 Comments

Nov 21, 2011 2:08 PM

John says...

Economic tweaking is not what we need most today. A complete awakening to reality is:
The only growth we need is in awareness.

The ever increasing demand for material goods at ever lower prices (productivity?) is an outcome necessitated by our near universal practice of usury which would otherwise result in price inflation. Inflation without offset by growth as described above is the nemesis of anyone making a living lending money because you could never realize any true gain in wealth.

To fix the system in favor of the environment and the greater society this practice has to end.
Those Harvard students all deserve A’s in economics.

Nov 18, 201110:32 AM

Gary Fincham says...

What a great opportunity we have to create change when large crowds protest against what they view as an unfair system or action. We are witnessing this around the world. The problem is there is no clear message in North America or Europe other than rich vs poor or 1% vs 99%. People are fed up with governments bailing out or bending to corporations using taxes provided by the 99% or allowing the expliotaion of what you call "natural capital". Unforunately without a clearly defined goal or action plan I fear we will lose this opportunity for needed change. As I see it we need our governments to not only support our businesses to grow, as this allows for technological enhancements that can improve our well being, but also they must more greatly protect the population from abuse generated by greed or desire to have a larger piece of the pie. Organizations such as yours, the Blacksmith Institute and others are what I see as the impetus behind this movement of which you deserve congatulations. Now we need your organizations to continue what you started and help these protesters gain direction to move forward. They need someone or something tangible to rally behind in order not to be dismissed as simply unemployed or anti-capitalist.

Nov 18, 2011 9:41 AM

Chuck Swift says...

I have worked with a variety of conservation/activist groups, and have enormous respect for what Mr. Suzuki and this foundation. Thank you for your great contributions.

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